iTunes 11 (expanded music view)

Proponents of digital music are in for a surprise as sales of digital albums and individual songs nosedived last year, for the first time since Apple revolutionized the music business with its iTunes Music Store back in 2003. According to a report by Billboard, industry executives are once again oblivious to the fact that consumers’ tastes are changing and are blaming streaming music services such as Pandora and iTunes Radio for the drop. The full breakdown is after the break…

Billboard relays a Nielsen SoundScan survey of full-year digital music sales revealing that individual song purchases on digital services dropped from 1.34 billion units in 2012 to 1.26 billion in 2013, a 5.7 percent decline. That didn’t come out of blue as per-track performance saw weak results over first three quarters of 2013.

As for sales of digital albums, these fell 0.1 percent to 117.6 million, down from 117.7 million units the year prior. However, that’s peanuts compared to a substantial 14.5 percent decline in physical CD sales.

Most-downloaded song of 2013?

Robin Thicke’s Blurred Lines with 6.5 million tracks sold, followed by Thrift Shop by Macklemore and Ryan Lewis.

Here’s the landscape of album sales marketshare for 2013:

  • CDs lead with 57.2 percent
  • Digital music accounts for 40.6 percent of all album sales
  • Vinyl format is responsible for a two percent share
  • Cassettes and DVDs made up 0.2 percent of all album sales

iTunes has remained the most popular venue for buying digital music with a 40.6 percent share of total U.S. album sales in 2013. In fact, Apple’s digital-only music store has been the biggest music seller in the world since 2010.

Beyonce iTunes

At the same time, music sales at Target and Walmart dropped 16.3 percent to about 78 million units and now comprise nearly 27 percent market share. Best Buy and Trans World saw a twenty percent decline to 39 million album units to comprise a 13.5 percent market share last year, the survey found.

Unfortunately, Nielsen SoundScan has not yet publicized streaming music performance so we have no cold, hard numbers to support the thesis that digital music sales are now being cannibalized by the growing popularity of streaming platforms such as Pandora, Rdio, iHeartRadio, iTunes Radio and many others.

iTunes Radio (teaser, iPod touch, iPad, MacBook Air, Apple TV)

And of course, the music biz has failed to see the writing on the wall, all over again. As Billboard put it, “industry executives initially refused to attribute the early signs this year of digital sales weakness to the consumer’s growing appetite for streaming”.

And you know what’s really unexpected?

That vinyl sales saw a healthy 31 percent uptick in the past year – go figure.

I must say I’m not terribly surprised by this development.

I used to be a frequent buyer at iTunes, having spent hundreds of dollars over the past decade purchasing individual songs and albums. That was before my music-listening habits started to change after I discovered Spotify, and especially following Apple’s introduction of iTunes Radio, a free music streaming service supported by ads.

I will still buy music files from time to time – typically individual songs and sometimes even whole albums – but I just don’t see the point in buying music. We live in a rental society now and it’s dawned on me that paying ten bucks per month to stream any song I want on Pandora or Rdio or whatever is a much better proposition to what alternative?

Dropping ten bucks on a new Beyoncé album?

Thanks, but no thanks. As far as I’m concerned, that’s no longer money well-spent, not in this economy – and I’m not even mentioning that music this decade has been terrible.

And what are your music consumption habits these days?

Do you rent your music exclusively or do you still believe in buying MP3s?